You had a post back in Dec. about the same problem. It sounds like none of the suggestions solved the problem.
The steps I find necessary with flip are.
1. select the device
2. select a communication medium, RS232
3. select the serial port
4. select the baud rate.
5. have the EA pin on the 89C51RD2 held high
6. have the PSEN pin held low
7. reset the 89C51ED2 while the two conditions above are met (reset is logic high on the reset pin, then back to low)
8. select connect in the flip dialog
9. If flip connects, the signature bytes are displayed if not it gives a timeout error
If these steps don't work it might be helpful to see a wiring diagram of the circuit you are using